Will my savings be taxed when I return to Australia?

Will my savings be taxed when I return to Australia?

Australian taxation advice: Q. I’m heading back to live in Australia soon and am afraid my savings will be taxed when I return. Should I sell my investment portfolio before I go back?

british pounds tax

A. If you’re an Australian working abroad then you’ve probably been considered a non-resident of Australia for tax purposes. The good news is all savings accrued during your overseas sojourn — regardless of where you live — are not taxed in any way, but will become taxable from the day you return. In the same way, none of the salary you’ve earned is taxable.

Deciding whether to sell any investments you’ve acquired should be based on two key issues:
Are you confident the investment will continue to perform? If you believe your funds will continue to perform well then why sell a good asset? You may as well keep benefiting from its performance.

Do you have a more important need for the money?  The most important use of funds on return for most expatriates is to become debt-free on their intended residence by paying off the mortgage. Selling your investments could be important in helping achieve this.

From an Australian tax perspective, any investment assets that you’ve built whilst abroad will become taxable in Australia from the date of your arrival, but only on the profit made from that point on. In doing this the Australian Taxation system deems you bought the asset on the date of your return at its market value on that date, not the original amount you paid.

For example, you may have bought shares for $1 some time ago but on the day of your return they are worth $3. Therefore, only profit above the $3 would ever be taxed in Australia following your return. For investments such as shares or unit trust allocations, the market value is the last price on the day of return. This includes Australian shares which have not been taxable whilst you were living abroad.

For property assets, you’ll be required to obtain a sworn valuation. Australian property is not included in this as it’s been a taxable activity during your time abroad.

When considering selling your investment portfolio you need to be mindful of some complicated rules regarding offshore investment policies. It’s essential to seek appropriate advice to review your portfolio thoroughly to ensure there are no surprises upon your return.

By Steve Douglas

Australasian Taxation Services Pty Ltd,
Ground Floor East, 8 Herron Quays, Canary Wharf, London E14 4JB, United Kingdom,
Tel 0207 9875181,
Email: uk@smats.net, Web: www.smats.net

Steve Douglas is the co-founder and Managing Director of Australasian Taxation Services (ATS), established in Singapore in 1995. ATS provides specialist taxation services to people of any nationality investing in Australian property, as well as Australian expatriates living overseas.  Areas of specialisation include the Australian taxation aspects of property investment, as well as expatriate and migration planning.